by Lance Turner
Posted 6/12/2013 11:14 am
Updated 2 years ago
Apollo Tyres Ltd of India announced Wednesday that it is buying Cooper Tire & Rubber Co. in an all-cash deal worth about $2.5 billion.
Apollo said shareholders of Cooper, whose Texarkana, Ark. plant employs about 1,600 people, will receive $35 per share in cash, a 40 percent premium to Cooper's 30-day volume-weighted average price.
The firms say the combined company will be the seventh-largest tire company in the world, with a combined $6.6 billion in total sales in 2012.
"The combined company will be uniquely positioned to address large, established markets, such as the United States and the European Union, as well as the fast-growing markets of India, China, Africa, and Latin America where there is significant potential for further growth," Apollo Chairman Onkar S. Kanwar said in a news release.
"Our combined portfolio of brands and products will be amongst the most comprehensive in the industry."
Roy Armes, Cooper's chairman, CEO and president, called the deal a "compelling transaction" in the best interest of its stockholders. He said it "offers attractive benefits to our customers and employees."
Charles Nickerson, vice president of economic development at the Texarkana Chamber of Commerce, told Arkansas Business the deal appears to be a positive one for Cooper and the local plant. He said the two companies' offer complimentary product lines with little overlap, and local Cooper leaders he talked to had been upbeat about the deal.
"Apollo was looking for a footprint in North America and China, which they didn't have, and Cooper gives them," he said.
The deal is expect to close in the second half of the year, after which Cooper will become a privately held company.
Apollo said it expects Cooper will be led by members of its current management team "and will continue to operate out of its facilities located around the world." It said the company "will continue to recognize the labor unions and honor the terms of collective bargaining agreements presently in effect while generally maintaining compensation and benefit levels for non-union employees."
Union employees at Cooper in Texarkana are represented by United Steel Workers Local 752L. Last year, those workers ratified a new four-year labor agreement that boosted salaries and set pay raises. The pay raises were the first since 2008, when the union implemented a salary freeze to keep the plant from closing.
Founded in 1914 and based in Findlay, Ohio, Cooper is currently the 11th-largest tire company in the world by revenue. It supplies premium and mid-tier tires worldwide through brands including Cooper, Mastercraft, Starfire, Chengshan, Roadmaster and Avon. It has plants in 11 countries and employs 13,000. In 2012, revenue reached $4.2 billion.
Apollo Tyers has manufacturing plants in India, the Netherlands and South Africa and exports throughout the world.